State orders pressure reduction in gas pipeline

State regulators have ordered San Diego Gas & Electric to immediately reduce the pressure inside one of its gas pipelines, saying information they received from the utility convinced them the 16-inch line could no longer be operated at the higher capacity without risk.

Neither the California Public Utilities Commission nor SDG&E would say what prompted last month’s order, which directed the utility to lower pressure by 20 percent. It also required the company to speed up inspections, replace a segment of the pipe and perform surveys to detect possible leaks.

“These directives are effective immediately,” Executive Director Timothy Sullivan wrote to SDG&E on July 8. “Please confirm in 4 working days that SDG&E will implement these as expeditiously as possible.”

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The utility lowered the pressure in Line 1600 to 512 pounds per square inch the next day. The line, which dates back to 1949, runs from Fallbrook to San Diego.

SDG&E also said it accelerated the line’s inspection schedule and planned to replace the segment identified by the commission before the end of December. Company officials also said they would continue bi-monthly checks and alert regulators to any leaks.

“Our top priority for our customers and our employees is safety,” the utility said in a statement. “SDG&E has an obligation and a commitment to continue to provide safe and reliable service to our customers in San Diego.”

The utilities commission has made pipeline safety a high priority since 2010, when a Pacific Gas & Electric pipeline explosion in San Bruno killed eight people and destroyed dozens of homes.

The blast prompted stricter rules for operating pipelines. It also led to a $1.6 billion civil penalty and criminal charges against PG&E. The San Francisco-based utility has denied all charges and a jury has been deliberating the criminal case since early last week.[week of 8/1]

It is not clear what specifically prompted Sullivan to order SDG&E to reduce the pressure in Line 1600.

Utilities commission spokeswoman Terrie Prosper issued a statement saying the order was based on unspecified information disclosed during a review of SDG&E’s application for a new $600 million pipeline the company wants to build between Rainbow Valley and Miramar.

“While there was no indication of an immediate safety threat, SDG&E made statements in A-15-09-013 that CPUC staff found to be indicative of potential issues in the future and decided to take steps to mitigate safety risks,” the statement said. “SDG&E has been cooperative.”

San Diego Gas & Electric and Southern California Gas, two regulated subsidiaries of San Diego-based Sempra Energy, want to replace the aging Line 1600 with a nearly 50-mile pipeline capable of pushing more natural gas through San Diego County and beyond.

The utilities currently rely on two primary lines to move natural gas across San Diego County — Line 1600 and Line 3010, which carries up to 90 percent of the load. Critics point to that disparity in saying Line 1600 could shut down without a notable impact to service reliability.

The company plan calls for replacing Line 1600 with a 36-inch pipe running generally along the east side of Interstate 15 from Riverside County to Marine Corps Air Station Miramar. The new line would be more than twice the size of its predecessor.

The application, filed with the utilities commission in September, drew opposition from consumer and environmental groups, who said the project is unnecessary, would raise costs and may instead be intended to boost Sempra’s international business interests.

Proposed pipeline

Critics point out that the utility monopolies make little to no money providing energy to customers, but are approved by the utilities commission to receive investment returns on infrastructure investments, so it is in their economic interest to keep developing more poles, wires and pipelines.

They also note the new pipeline application comes as policymakers are working to reduce greenhouse gas-emitting fuel sources and consumer demand for natural gas is estimated to keep diminishing over the next decades.

“California ratepayers should not foot the bill for costly new fossil fuel infrastructure investments that are, or will soon become, stranded assets, and whose benefits appear primarily intended to flow to Sempra’s unregulated subsidiaries,” Sierra Club attorney Matthew Vespa wrote in a commission filing.

As evidence, the Sierra Club cited Sempra Energy annual reports, which say there is enough natural gas for the country to become a net exporter and Sempra is “evaluating the economics of converting” its liquefied natural gas import terminal in Baja California to an export operation.

Such a move would provide a “first mover advantage on West Coast of North America” and a “location/shipping cost advantage for Asia,” Sempra Energy President Mark Snell told analysts at a 2014 conference, but would require “additional pipeline capacity.”

“Sempra as a company is very bullish on gas exports,” Vespa said in an interview. “They’re looking to lock in as many reliable sources as they can. This (new pipeline application) is not about need.”

Utility officials rejected the Sierra Club assertion and said the new pipeline is part of an overall strategy to improve operations, which they call the Pipeline Safety & Reliability Project.

“SDG&E has no plans to use the proposed pipeline to export gas to Mexico, as this pipeline is needed for safety and reliability in San Diego,” the company statement said. “The need for this project is distinct and separate from the business goals of any other project or company.”

Utility officials said even with the looming transition away from fossil fuels, natural gas will play an important role in the energy sector for many years to come.

“Customers rely on natural gas every day to meet a variety of needs, from home and water heating to cooking, electric generation to transportation,” SDG&E said. “In addition to the millions of residents, small businesses and visitors that rely on natural gas every day, San Diego’s top natural gas customers include the military, hospitals and electric generators.”

In addition to protests from consumer organizations and environmental groups, the city of Long Beach has raised concerns. The city is one of the largest municipal gas utilities in the country and relies on Southern California Gas for service.

“SoCalGas’ estimated rate impact on the (transportation) rate is an increase of 51 percent,” lawyers for Long Beach told the commission. “The 51 percent increase is in addition to the 17.3 percent (transportation) rate increase the applicants are currently requesting.”

In June, three weeks before Sullivan ordered the pressure lowered on Line 1600, the commission’s Office of Ratepayer Advocates filed a motion urging regulators to reject the new pipeline.

“Applicants’ own information fails to show the need of the proposed project,” the ratepayer advocate argued in its motion, rejected weeks later by a utilities commission judge.

The Utility Reform Network, or TURN, said SDG&E and Southern California Gas have not demonstrated a need for additional pipeline capacity. Lawyers at the San Francisco consumer group said Line 1600 can be safely operated after appropriate testing.

“Sempra had promised to hydrotest this line several years back, but it has failed to hydrotest because it prefers to replace the line,” TURN staff attorney Marcel Hawiger said. “Given the lack of a hydrotest, the (commission) properly required a pressure reduction and additional measures until the decision on whether to hydrotest or replace is made.”

The utility said the Natural Gas Pipeline Safety Act of 2011, enacted in the wake of the San Bruno explosion, calls for Line 1600 to be tested or replaced, and constructing a new pipeline is a more appropriate solution.

“SDG&E is still required by law to either ‘pressure test’ or ‘replace’ the pipeline,” the company said. “We believe the Pipeline Safety & Reliability Project, which was filed more than 10 months ago, is the long-term solution for implementing safety measures and increasing reliability.”

The commission has yet to schedule a hearing on the pending application.